Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
$$\begin{array} { l l r r r }
\text { Activity } & \text { Cost Driver } & \text { Amount } & { \text { M } } & { \text { XY } } \
\text { Production setups } & \text { Number of setups } &8 2 , 0 0 0 &8 & 12 \
\text { Material hardling } & \text { Number of parts } & 48,000 & 56 & 24 \
\text { Packaging costs } & \text { Number of urits } & 130,000 & 80,000 & 50,000 \
& &\$ 2 6 0 , 0 0 0 & &
\end{array}$$
-
What is the total overhead allocated to Product M using the current system?
A) $113,600.
B) $130,000.
C) $146,400.
D) $160,000.

Question

Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
$$\begin{array} { l l r r r } 
\text { Activity } & \text { Cost Driver } & \text { Amount } & { \text { M } } & { \text { XY } } \
\text { Production setups } & \text { Number of setups } &8 2 , 0 0 0 &8  & 12 \
\text { Material hardling } & \text { Number of parts } & 48,000 & 56 & 24 \
\text { Packaging costs } & \text { Number of urits } & 130,000 & 80,000 & 50,000 \
& &\$ 2 6 0 , 0 0 0 & &
\end{array}$$
-
What is the total overhead allocated to Product M using the current system?
A) $113,600.
B) $130,000.
C) $146,400.
D) $160,000.

Quizplus · Accepted Answer

The Answer of Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
$$\begin{array} { l l r r r } 
\text { Activity } & \text { Cost Driver } & \text { Amount } & { \text { M } } & { \text { XY } } \
\text { Production setups } & \text { Number of setups } &8 2 , 0 0 0 &8  & 12 \
\text { Material hardling } & \text { Number of parts } & 48,000 & 56 & 24 \
\text { Packaging costs } & \text { Number of urits } & 130,000 & 80,000 & 50,000 \
& &\$ 2 6 0 , 0 0 0 & &
\end{array}$$
-
What is the total overhead allocated to Product M using the current system?
A) $113,600.
B) $130,000.
C) $146,400.
D) $160,000.

Allure Company Manufactures and Distributes Two Products, M and XY